Being a student is both fun and hard. You are away from your home and family, surrounded by your friends and professors, while your life pretty much boils down to studying and partying.
All those new people and living conditions make your life interesting and dynamic but also difficult and stressful. Plus, some students have it even more difficult if they are in financial need. This can completely distract them and shift their focus from their studies.
Some of these young people are eligible for student aid, scholarships or grants. But some of them are not, so they find themselves in a very difficult situation. How are they going to pay for their tuition, accommodation, books and so on? Will they be able to continue their studies and get a degree? Is there any option to refinance their student loan?
All these are questions that bother financially vulnerable students. If you have tried different options to cover your college costs but none of them has given you enough money, maybe it’s time you tried personal loans.
We present you a list of the best personal loans for students. Take a careful look at them and compare their terms. That way, you will definitely find an attractive deal to get your finances up and running.
Best Personal Loans for Students
We have created a list of top personal loans for college students to help you choose the one that best fits your needs. All of these are great deals, especially considering the average student loan interest rate.
SoFi (Social Finance) was founded in 2011 and today it is one of the most prominent names in the lending business. It is the leading student loan refinancing company, having refinanced student loans worth $18 billion so far to almost 200,000 people.
They offer fixed rates ranging from 3.25% to 7.125% APR if you become a member of their autopay program. Similarly, if you enroll in autopay, the variable rates range from 2.56% to 7.4%.
It takes as little as two minutes to get pre-approved online. You have the options to save on your monthly payment or on total student loan interest. Once you upload screenshots of your information, you can sign the paperwork electronically. Finally, SoFi will pay off your servicer or servicers and issue you one new student loan with a low monthly payment.
It is important to note that SoFi does a soft credit pull, which means that the inquiry will not affect your credit score. You can apply for these loans regardless whether you are at the graduate or undergraduate level. Also, you can use them to consolidate both federal and private student loans.
You are eligible to take out an Upstart loan if you are a current college student or graduate. You have to be at least 18 years old and have proof of income or expected income. Personal loans offered by this company have rates from 7.73% to 29.99%.
The borrower’s credit score needs to be at least 640, but Upstart accepts applicants with short credit history to produce a FICO score. However, credit score is not the only factor that is used to determine whether you qualify. Upstart will also look at your school, grades, major and job history.
Earnest claims that people who refinance with them save around $31,000 on average. They offer variable rates that start at 2.57% and fixed rates which start at 3.25% if you are enrolled in autopay. Also, they do a soft pull on your credit, so you can get a rate estimate without your score getting affected.
Earnest allows you to decide on the minimum monthly payment, increase payment whenever you want to pay off the loan faster, as well as make extra or early payments without any fees. In addition, you can skip a payment and make up for it later and also save on interest if you choose bi-weekly payments. Finally, you can use Earnest loans to consolidate both your private and federal loans.
If you pick LendKey, you can count on rates as low as 2.58% variable APR or 3.15% fixed APR. You can expect to save $16,000 on average with their loans. Their loans enable you to reduce your interest rate and monthly payments, as well as save thousands of dollars.
Also, you will be able to combine all your existing loans, both federal and private, into one loan and refinance them with a new LendKey student loan, thus simplifying your finances. If you opt for these loans, you won’t get any origination fees. Finally, many lenders in LendKey network offer many different repayment options, including the option to repay only the interest during the first four years.
The last company that we will recommend is Laurel Road. Their loans can help you save as much as $20,000. They have no origination fees and no prepayment penalties, both of which are great features. In addition, they offer economic hardship support to financially vulnerable students and a discount when you enroll in their autopay program.
Just like the rest of the lenders on our list, Laurel Road refinances both federal and private student loans. Also, this company does a soft credit pull so as not to hurt your credit score.
Can College Students Get a Personal Loan?
Yes, college students can get a personal loan. The fact that most college students have no credit history will make it more difficult for them to get a loan. However, it is not impossible.
The lending market is becoming more and more flexible, so many of those who were not able to get a loan just a couple of years ago can now find an attractive loan without too much hassle. This market flexibility is a result of the increasing competition among lenders. There are more and more people entering the lending business because it is very profitable. In turn, this means that they have to compete among themselves in order to attract borrowers.
Therefore, as a student without a credit history, you are able to find numerous lenders willing to give you a loan. Some of them will have more requirements, some will look at more factors, but you will definitely be able to choose a loan that is perfect for your needs.
Also, lending niches are becoming increasingly popular and the lines between them are becoming thicker. In other words, more and more lenders specialize in a particular field of lending such as debt consolidation, car loans, student loans, etc. This gives you a great opportunity to find a student loan lender who offers the best loan for your needs.
How to Get a Loan
If you decide to get a personal loan, you should understand all the necessary steps that you need to take in order to get the best loan available.
Decide how much money you need. This is the first step that will give you an idea what kind of loan to look for.
Check your eligibility. This means that you should consider your credit score, income (if you have any), etc.
Search for loans. Now, this is when the search for loans actually starts. You will need to invest some time and effort to find legitimate loans that are the best for you. Check for loans on the Internet and at Student Aid office on campus.
Compare. Once you have found a few loans that grabbed your attention, do a comparison of all their features. You should pay attention to the APR, monthly payment, the total cost of the loan, rewards (if there are any) and a possibility to defer the loan. And of course, read the fine print.
Apply for the loan. Once you have found the best option, apply for the loan and wait for the answer.
What Loans Should You Avoid?
It is essential to know what types of loans you should avoid. We strongly recommend against taking payday and auto title loans.
A payday loan is a short-term loan specifically targeted at people who are in dire need of money. It is unsecured, which means that it doesn’t require any collateral. The loan period is usually from 15 to 30 days and payment is to be made on the next payday. The average APR for payday loans is around 400 %, which, frankly, is insanely high.
If you can’t repay the entire loan on the next payday, the lender will charge you only the rates and you will have to pay the entire amount next month (loan plus rates). This is how people get in a debt cycle, so we advise you not to get this type of loan. Moreover, payday loans are illegal in some states.
Auto title loans
Auto title loans are a type of secured loans, which means that you need to pledge your car as security. This way, the lender feels safer and can trust you that you will pay back the loan.
However, auto title loans are not just regular secured loans. The thing with them is that the loan amount is usually only around 40% of your car’s value. Furthermore, the APR is around 300%, which is very close to payday loans.
This type of loans has also got many people in a debt cycle, so we advise you to stay away from it.
How to Avoid Scam Loans
There are a number of lending companies that want to rob people off of their money. This is a list of things to pay attention to when searching for a personal loan:
Upfront fees. If the lender is legitimate, they won’t ask for an upfront fee. If there are any fees included in the loan, most lenders should charge it afterward as a percentage of the commission.
Physical address. Every legit lending company has a physical address. If it doesn’t, it’s probably a scam.
Fine print. Read the fine print on your loan contract carefully before you sign it. If it contains any suspicious points, ask your lender to clarify them. Some companies change their terms to predatory when you start repaying the loan, so you should be very careful when signing your contract.
How to Get Better Loan Terms
If you want to improve the terms that the lender can offer you, you have a couple of ways to do this.
One way to improve loan terms is to get a secured loan. Secured loans require that you pledge some asset (e.g. your car). This helps lenders, assuring them that you are serious about paying back the loan, so they can give you better terms. If you default, they can take your asset in lieu of the money. Unlike auto title loans, the APR of secured loans is up to 36%, which is incomparably lower.
Another option to improve loan terms is to get a co-signer or guarantor. In this case, it is not your credit that the lender will consider, but theirs. Also, in case you default, this person will have to repay the loan in full. So, be careful before you decide to get a guarantor or co-signer since they are as responsible for the loan as you are.
Those were the best personal loans for college students and tips on how to find more of them. It is important to know that it is very possible to get a loan if you are willing to spend some time searching for it. We strongly recommend you to stay away from scams and predatory loans such as payday and auto title loans.
If you follow all the steps that we listed above, you will see that there a number of lenders willing to give you a loan. We are sure that, if you follow our advice, you will find a great personal loan for college students.